House prices in England and Wales jumped by 2.5% in January, adding more than £4,700 to the average cost of a property, official figures show.
A fall in the number of homes coming onto the market, combined with the announcement of new stamp duty rates for investors in November’s autumn statement, boosted demand and prices.
Data from the Land Registry, based on sales registered during the month, showed the biggest monthly leap in prices since June 2002. The average cost of a home rose to £191,812, and the annual rate of price growth increased to 7.1%, from 5.5% in December.
The biggest monthly increase was recorded in Wales, where the Land Registry said prices had risen by 3.7%, to an average of £125,665.
London recorded a 2.8% increase during January, and prices are now 13.9% higher than a year ago, at an average of £530,409. The north-west and north-east of England registered monthly falls, of 0.4% and 1.6% respectively, and only small annual increases.
The Land Registry’s latest transaction figures, which are for November 2015, show that the number of sales fell markedly over the month, from 83,763 in October to 72,167.
This was the lowest November figure in three years and may have been a result of fewer homes coming onto the market in 2015. The Royal Institution of Chartered Surveyors has been reporting a shortage of stock for sale for almost a year.
Jeremy Leaf, a former Rics chairman who runs an estate agency in north London, said: “The decline in number of property transactions continues to be a worry. If people aren’t able to move in and out of the market when they want to, there will be an inevitable knock-on effect for the rest of the economy.”
The Land Registry’s data is based on homes that have changed hands before and were sold late in 2015. Lenders reported a busy January for mortgages, with the British Bankers’ Association saying its members had approved a third more home loans than in the same month of 2015.
However, some have warned that the recent announcement of an EU referendum in June may lead buyers to put their plans on hold.
Nick Leeming, chairman of estate agency Jackson-Stops & Staff, said that until the outcome of the vote was known “there will be short-term interruption to the property market”.
He said: “The market will also be eagerly awaiting the outcome of the Budget announcement in mid-March to see what impact, if any, it has on issues such as stamp duty, buy-to-let investment and the chronic shortage of new homes.
“The usual spring buying season may be temporarily interrupted by this uncertainty, but the influencers that have kept the market strong – a shortage of housing stock, interest rates destined to stay low according to the Bank of England and competitive mortgage rates – will still be in place come June.”
The Land Registry figures showed that the biggest increases in house prices over the past year had been in Reading, where buyers had seen costs rise by 16.1%, to an average of £270,146. Other areas that recorded high rises were also within commuting distance of London.
Leaf said: “Buyers are finding better value than in London, although if property prices continue to rise at the same pace that may no longer be true.
“With trains taking only half an hour into Paddington, you can get there faster from Reading than the suburbs, while living in parts of Berkshire will mean a reasonable quality of life.”
Property website Rightmove said it had seen a record 1.3bn visits to its website in 2015, a year-on-year increase of 18%. The website, which last year saw the launch of rival OnTheMarket, reported that its pre-tax profit for the year had risen by 12% to £137.1m, while its share of the market had grown to 77%, from 74% in January 2015.
Its average revenue per advertiser was up by £70 to £754 a month.
The firm said the outlook for online property advertising “remains positive as consumers and customers become ever more digital and the market continues to shift from traditional advertising channels”.